Leading stock exchange NSE and its arm NSE Clearing Ltd (NCL) on Tuesday settled with markets regulator Sebi a case of trading glitch that occurred in February 2021 after paying a settlement amount of Rs 72.64 crore.
Individually, the National Stock Exchange (NSE) paid a total of Rs 49.77 crore and NCL doled out Rs 22.88 crore, according to a settlement order.
Leading stock exchange NSE and its arm NSE Clearing Ltd (NCL) on Tuesday settled with markets regulator Sebi a case of trading glitch that occurred in February 2021 after paying a settlement amount of Rs 72.64 crore.
Individually, the National Stock Exchange (NSE) paid a total of Rs 49.77 crore and NCL doled out Rs 22.88 crore, according to a settlement order.
Trading was halted at the NSE for nearly four hours on February 24, 2021, reportedly due to telecom links failure leading to unavailability of the online risk management system of NCL.
NCL, a wholly-owned subsidiary of NSE, is responsible for clearing and settlement of all trades executed on the exchange.
Apart from the settlement amount, the regulator has ordered that NSE's former MD and CEO Vikram Limaye, it's then Chief Technology & Operations Officer Shiv Kumar Bhasin and NCL's MD Vikram Kothari take up and pass appropriate training courses within the next six months.
Also, they have been asked to commit to pro bono community service of at least 14 days over the next year towards investor education and awareness, by actively contributing to specified programmes that are conducted by and monitored under the aegis of Sebi's Office of Investor Assistance and Education.
The order came after NSE, NCL and three senior executives filed applications with Sebi proposing to settle the proceedings initiated against them, "without admitting or denying the findings of facts" through a settlement order.
"The instant proceedings initiated against the applicants vide Show Cause Notice dated August 11, 2021 are disposed of," Sebi said in its settlement order.
On February 24, 2021, NSE took a decision to halt trading in all its segments from 11:40 am. The exchange informed that it had multiple telecom links with two service providers and that it received communication from both the telecom service providers that there are issues with their links due to which there is an adverse impact on NSE system also referred to as the "glitch".
The trading resumed from 3.45 pm and the trading day was extended up to 5 pm at NSE and two other bourses BSE and Metropolitan Stock Exchange of India.
The Securities and Exchange Board of India (Sebi) conducted an investigation into whether the failure of systems of NSE and NCL following the technical glitch was in violation of the regulatory norms. After the conclusion of investigation, a show cause notice was issued on August 11, 2021, to the applicants.
In the show cause notice, it was alleged that NSE and NCL failed to ensure systems preparedness and readiness to move operations to disaster recovery site (DRS), ensure orderly execution of trades on real time risk management of trades and market integrity and recover operations within recovery time objective (RTO) of four hours.
It also alleged failure on the part of crisis management team, which included three executives.
Pending the proceedings initiated through the SCN, the applicants proposed to settled the case and finally settled the matter with Sebi by remitting the settlement amount.